At a glance: Medicare health insurance in Texas
- More than 4 million people in Texas have Medicare, but that’s only about 14 percent of the state’s population.
- A third of Texas Medicare beneficiaries had Medicare Advantage plans (or other private Medicare plans, including Medicare Cost plans) as of 2017; plan availability ranges from eight plans to 54, depending on the county.
- In Texas, 73 insurers offer Medigap plans and more than three-quarters of a million people are enrolled. Medigap insurers are required to offer at least Medigap Plan A to disabled beneficiaries under the age of 65.
- Premiums for stand-alone Part D prescription plans in Texas range from about $10 to $140 per month in 2019; 1.7 million Texas Medicare beneficiaries have stand-alone Part D plans, plus 1.25 million with Part D integrated with Medicare Advantage.
- Per-enrollee Original Medicare spending in Texas is the second-highest in the nation (Louisiana is the only state where average per-beneficiary spending is higher).
Medicare enrollment in Texas
The number of Medicare beneficiaries in Texas exceeded 4 million as of August 2018, and has continued to grow since then; only Florida and California have more residents enrolled in Medicare. But less than 14 percent of Texas residents are enrolled in Medicare, compared with a little more than 18 percent of the United States population enrolled in Medicare. Texas has among the youngest populations in the country, and since most people become eligible for Medicare when they turn 65, the state’s lower median age results in a smaller percentage of its residents enrolled in Medicare.
Although most people become eligible for Medicare when they turn 65, Medicare eligibility is also triggered for people under age 65 once a person has been receiving disability benefits for 24 months, or has ALS or end-stage renal disease. Nationwide, 16 percent of all Medicare beneficiaries are eligible due to disability. In Texas, 15 percent of Medicare beneficiaries are under the age of 65.
Medicare Advantage in Texas
In most areas of the country, Medicare beneficiaries can choose Original Medicare or a Medicare Advantage plan. Original Medicare is provided directly by the federal government, and includes Medicare Parts A and B. Medicare Advantage is administered by private insurance companies, and while it includes all of the benefits of Medicare Parts A and B, Advantage plans typically have additional benefits, such as integrated Part D prescription drug coverage and extras like dental and vision. But provider networks are limited with Medicare Advantage, and out-of-pocket costs are typically higher than a person would have if they opted for Original Medicare plus a Medigap plan. In short, there are pros and cons either way, and no one-size-fits-all solution.
Medicare Advantage plans are available in all 254 counties in Texas in 2019, but plan availability ranges from as few as eight plans for sale in some areas of the state, to as many as 54 plans for sale in Dallas County.
A third of Texas Medicare beneficiares were enrolled in private Medicare plans in 2017. These were mostly Medicare Advantage plans, but some residents in Texas have Medicare Cost plans, which are another form of private coverage. This mirrored the nationwide share of Medicare beneficiaries enrolled in private plans. The other 67 percent of Medicare beneficiaries in Texas had opted for Original Medicare instead.
Medicare beneficiaries can switch between Medicare Advantage and Original Medicare (and can add or drop a Medicare Part D prescription plan) during the Medicare annual election period, which runs from October 15 to December 7 each year. As of 2019, Medicare Advantage enrollees also have the option to switch to a different Advantage plan or to Original Medicare during the Medicare Advantage open enrollment period, which runs from January 1 to March 31.
Medigap in Texas
More than half of Original Medicare beneficiaries have supplemental coverage provided by an employer-sponsored plan or Medicaid. But for those who don’t, Medigap plans (also known as Medicare supplement plans) are designed to pay some or all of the out-of-pocket costs (deductibles and coinsurance) that enrollees would otherwise have to pay themselves. Since Original Medicare does not include a cap on out-of-pocket costs, most enrollees maintain some form of supplemental coverage, and Medigap plans are one way to do this.
According to an AHIP analysis, there were 775,575 Texas Medicare beneficiaries with Medigap coverage as of 2016.
There are 72 insurers licensed to sell Medigap plans in Texas.
Although Medigap plans are sold by private insurers, the plans are standardized under federal rules. There are ten different plan designs (differentiated by letters, A through N), and the benefits offered by a particular plan (Plan A, Plan F, etc.) are the same from one insurer to another.
Unlike other private Medicare coverage (Medicare Advantage and Medicare Part D plans), there is no annual open enrollment window for Medigap plans. Instead, federal rules provide a one-time six-month window when Medigap coverage is guaranteed-issue. This window starts when a person is at least 65 and enrolled in Medicare Part B (you have to be enrolled in both Part A and Part B to buy a Medigap plan).
Although disabled Americans under the age of 65 are eligible for Medicare, federal rules do not guarantee access to Medigap plans for people who are under 65. But the majority of the states — including Texas — have implemented rules to ensure that disabled Medicare beneficiaries have at least some access to Medigap plans. Texas law requires Medigap insurers to offer at least Medigap Plan A to disabled enrollees under age 65, during the six-month period that begins when they’re enrolled in Medicare Part B. Medigap Plan A is the least comprehensive of the Medigap plans, but it will cover the 20 percent Part B coinsurance that the enrollee would othewise have to pay out-of-pocket.
Disabled Medicare beneficiaries under the age of 65 have another six-month Medigap open enrollment period when they turn 65. At that point, they have access to any of the available Medigap plans, at the standard premiums that apply to people who are enrolling in Medicare due to turning 65 (premiums are generally significantly higher for Medicare beneficiaries under age 65, since their disabilities result in more costly medical care).
Medicare Advantage plans are available to anyone eligible for Medicare, except people with end-stage renal disease. So unless they have ESRD, Texas Medicare beneficiaries under the age of 65 can choose a Medicare Advantage plan instead of Medigap Plan A. Medicare Advantage plans do have a cap on out-of-pocket costs, but they also tend to have limited provider networks, which is an important consideration for people with serious health issues.
Although the Affordable Care Act eliminated pre-existing condition exclusions in most of the private health insurance market, those regulations don’t apply to Medigap plans. Medigap insurers can impose a pre-existing condition waiting period of up to six months, if you didn’t have at least six months of continuous coverage prior to your enrollment. And if you apply for a Medigap plan after your initial enrollment window closes (assuming you aren’t eligible for one of the limited guaranteed-issue rights), the insurer can look back at your medical history in determining whether to accept your application, and at what premium.
Medicare Part D in Texas
Original Medicare does not cover the cost of outpatient prescription drugs. As noted above, more than half of Original Medicare beneficiaries have supplemental coverage via an employer-sponsored plan (from a current or former employer or spouse’s employer) or Medicaid, and these plans often include prescription coverage. But Medicare beneficiaries who don’t have drug coverage through Medicaid or an employer-sponsored plan need to obtain Medicare Part D prescription coverage (prior to 2006, some Medigap plans included prescription coverage; people who still have those plans can keep them, but they have not been for sale since the end of 2005).
Part D coverage can be purchased as a stand-alone plan, or as part of a Medicare Advantage plan that includes Part D prescription drug coverage.
In Texas, there are 27 stand-alone Part D plans for sale in 2019, with premiums that range from about $10 to $140/month.
As of the end of 2018, there were nearly 1.7 million Medicare beneficiaries in Texas with stand-alone Part D plans. An additional 1.25 million Texas residents had Part D coverage integrated with their Medicare Advantage plans.
Medicare spending in Texas
In 2016, Original Medicare’s per-beneficiary spending in Texas averaged $11,297, which was 16 percent higher than the $9,761 national average. Texas had the second-highest average per-beneficiary costs in the country; only Louisiana had higher average costs. That’s based on data that were standardized to eliminate regional differences in payment rates, but it did not include costs for Medicare Advantage.
You can read more about Medicare in Texas in our state Medicare guide. You can also contact HICAP, the Texas Health Information, Counseling, and Advocacy Program, with questions related to Medicare coverage in Texas.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.